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JUAN BALBUENA and TEODULFO RETUYA, Petitioners,
- versus -
LEONA APARICIO SABAY, DOROTEO
SABAY, SEVERINO SABAY, DESDICHADO SABAY, LEONARDA SABAY, VIRGILIO SABAY and
NAPOLEON SABAY, Respondents. |
G.R. No. 154720 Present: QUISUMBING, J., Chairperson, CARPIO MORALES, BRION, ABAD, JJ. Promulgated: September
4, 2009
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D E C I S I O N |
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BRION, J.: |
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The present petition[1]
seeks the reversal of the decision of the Court of Appeals (CA) in
CA-G.R. No. 37507,[2]
declaring respondents Leona Aparicio Sabay, Doroteo Sabay, Severino Sabay,
Desdichado Sabay, Leonarda Sabay, Virgilio Sabay and Napoleon Sabay (the respondents)
the true and lawful owners of the lands subject of the complaint. The assailed CA decision granted the
respondents’ appeal from the decision of the Regional Trial Court (RTC),
Branch 9,
THE ANTECEDENTS
The case
originated from a complaint filed on
In their
Answer, the respondents (heirs of David Sabay) denied the petitioners’ alleged possession,
claiming that the late David Sabay was the possessor of the lands from 1947 to
1956. They also claimed that the
Definite Deed of Sale was void as it conveyed lands that, at the time of sale,
did not belong to Leoncia; the lands had been sold to David Sabay on
The
respondents then asked for leave of court to file and admit a third- party
complaint against the Ex-Officio Provincial Sheriff of
At the trial of the case, the
parties proceeded to prove their respective claims, presenting testimonial and
documentary evidence. The petitioners
presented all documents to prove their acquisition of the lands via an execution sale. The
respondents, on the other hand, presented: (1) the June 14, 1947 document of
sale[3]
between Leoncia and David Sabay, which pertinently described one of the lots
then being sold to be subject of litigation and awaiting court decision and which
stipulated that the sale was burdened with the condition that if Leoncia should
lose the case, she would reimburse David Sabay with the purchase price of the
lot; and (2) the December 31, 1950 deed of sale[4]
between Leoncia and David Sabay that provided for a pacto de retro
clause, that Leoncia can buy back the lands within 4 years from the signing of
the deed of sale.
As it turned out (also during the
trial), one of the three parcels of land was covered by a
The RTC
Decision
As
mentioned above, the RTC rendered a decision in the petitioners’ favor. It based its conclusion that the petitioners
have a better right to the lands on the finding that the petitioners acquired
the lands in good faith. To the RTC, the
petitioners’ purchase of the lands in good faith created a right that is
superior to the unrecorded earlier sale of the lands to David Sabay. The RTC cited the familiar rule that where there was nothing in the title to indicate any cloud or vice in the
ownership of the property, or any encumbrance thereon, the purchaser is not
required to explore farther than what the Torrens title upon its face indicates
in quest of any hidden defect or inchoate right that may subsequent defeat his
right thereto. On
this basis, the trial court considered the petitioners purchasers in good faith.
The RTC mentioned that while Lanci v. Yangco[5] holds that the purchaser at an auction sale only acquires the identical interest in the property of the judgment debtor or conveyances or alienation made by a judgment debtor via lawful contract before levy will be valid as against the purchaser at the auction sale, the conveyance and/or encumbrance of registered properties, however, must still be indicated or inscribed in the certificate of title. Lanci, the RTC said, was after all decided under a special circumstance – the earlier filing (prior to the execution sale) of a third-party claim by persons claiming to have already bought the property effectively charged the purchaser at public auction with actual notice of the prior sale. Lanci too, the RTC claims, has been reversed and revoked by the Supreme Court in Philippine National Bank v. Camus[6] where we ruled that, under Section 50 of Act No. 496, instruments executed by the owners purporting to transfer or encumber registered land shall operate only as evidence or authority for the Register of Deeds to effect registration; it is the act of registration that shall be the operative act to convey and affect the land. This ruling is now purportedly strengthened with the amendment of Sections 50 and 51 of Act No. 496 by Sections 51 and 52 of Presidential Decree No. 1529.
In short, the RTC concluded that the Sheriff’s Definite Deed
of Sale vested the petitioners with absolute right of
ownership over the lands, as the law and jurisprudence in force at the time of the
sale to David Sabay require the inscription of conveyances on the titles of
lands to be binding and effective.
The CA Decision
As previously stated, the CA reversed
the RTC decision on appeal. The CA pointed
out that the RTC overlooked an important and determinative circumstance of the case
– the
With this finding, the CA rejected the
application of the RTC’s cited doctrine that the person who buys from a
registered owner need not inquire farther than what the certificate of title
indicates. The protection accorded a purchaser in good faith, according to the
CA, applies only to one who purchased the property from the registered owner,
not to a person who bought the property from someone who could not show any
title or evidence of his capacity to transfer the land; utmost caution and a higher
degree of prudence are required when one buys from a person who is not a
registered owner.
Thus, according to the CA, the petitioners should have been placed
on guard, for they purchased the lands from a non-registered owner. With their admission that they examined the lands’
papers in the
The CA thus considered the RTC’s declaration that the
petitioners were purchasers in good faith to be without factual and legal
basis. It accordingly ruled that the petitioners
only acquired, at the auction sale, whatever interest the judgment debtor,
Leoncia, had on the subject properties. In so ruling, the CA concluded, too, that
the respondents’ right over the lands – based on a prior unregistered sale – is
superior to that of the petitioners who purchased the lands at an auction sale.
As the petitioners failed to exercise
due diligence in ascertaining the right, interest and claim of the judgment-debtor,
Leoncia, to the lands at the time of the levy, they are bound to recognize the adverse
rights and claims to the lands existing prior to the levy.
Unsuccessful at the CA, the petitioners are now before us,
asking us to decide the following:
ISSUES
I. THE HONORABLE COURT OF APPEALS, SPECIAL ELEVENTH DIVISION, GRAVELY ABUSED ITS DISCRETION WHEN IT REVERSED THE DECISION OF THE REGIONAL TRIAL COURT OF CEBU, BRANCH 9, BY HOLDING THAT THE COURT A QUO’S DECLARATION THAT PETITIONERS WERE PURCHASERS IN GOOD FAITH HAS NO FACTUAL AND LEGAL BASIS
II. BY TOTALLY IGNORING THE ADMISSION OF RESPONDENTS THAT THEIR PREDECESSORS-IN-INTEREST HAVE AGREED TO THE CONDITION IN THE DEED OF SALE THAT HE BE REFUNDED OF THE CONSIDERATION IF THE VENDOR LOST HER CASE, THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN HOLDING THAT RESPONDENTS RIGHT OVER THE SUBJECT PROPERTIES, AS A RESULT OF A PRIOR UNREGISTERED SALE, IS FAR MORE SUPERIOR TO PETITIONERS RIGHT AS PURCHASER AT AN AUCTION SALE.
OUR RULING
We find the petition devoid of
merit.
As a preliminary matter, we note that the respondents’ first objection
to the present petition is that it did not properly raise issues of law and
should therefore fail given that a Rule 45 petition requires that the appeal
raise only questions of law.[7]
We disagree with this position, as our reading of the whole petition –
setting aside and glossing over the petitioners’ use of the phrase “grave abuse
of discretion” in defining the issues – shows that the petition does not
involve any factual issue. The facts when
the case reached us were neither disputed nor challenged. We are, therefore, concerned with the legal
issue, based on established facts, of which
of the competing property rights of the parties – those of the purchaser at an
execution sale or those derived from a sale or disposition prior to the levy on
execution – shall prevail.
The issue raised in the petition is not entirely novel, as we have
previously ruled on the same issue in Panizales
v. Palmares.[8] Briefly, the facts of this cited case are as
follows: (1) on March 19, 1958, Geronimo
Panizales bought the disputed lot in a private sale from the transferee of the
original owner thereof; (2) on March 16, 1961, Valerio Palmares bought the same
lot at the public auction sale conducted pursuant to a writ of execution issued
at the instance of the judgment creditor who was the prevailing party in a suit
against the original owner, the judgment debtor; and (3) when Panizales brought
suit to vindicate his right, the lower court decided in his favor. In upholding the lower court, we ruled:
Deference to authoritative,
pronouncements of this Tribunal as to what property may be levied on in
execution calls for the affirmance of the appealed decision. From the stipulation of facts, it is
undisputed that as far back as
The ruling in Potenciano v.
Dinero, the opinion being penned by Justice Alex Reyes is illuminating.
Thus: 'The Rules of Court provide that a
purchaser of real property at an execution sale 'shall be substituted to and
acquire all the right, title, interest, and claim of the judgment debtor thereto.'
(Rule 39, Section 24.) In other words,
the purchaser acquires only such right or interest as the judgment debtor had
on the property at the time of the sale. x x x It follows that if at that time the judgment
debtor had no more right to or interest in the property because he had already
sold it to another then the purchaser acquires nothing." One of the cases cited in the above opinion, Barrido
v. Barreto, speaks to this effect: "Este Tribunal, en varias decisiones ha sentado la doctrina de que un acreedor
Judicial, como lo era el aqui apelante solo adquiere en una venta en virtud de
una ejecucion un derecho identico al del deudor judicial - en este caso,
Francisco Cuenca - sobre los bienes que son objeto de la venta en subasta
publica." The Barrido decision in turn makes reference to Lanci v.
Yangco, where Justice Street, speaking for this Court, stated: "It is
established doctrine that a judgment creditor only acquires at an execution
sale the identical interest possessed by the judgment debtor in the property
which is the subject of the sale. He therefore takes the property subject to
all existing equities to which the property would have been subject in the
hands of the debtor. It results, therefore, that, if the deed of the judgment
debtor Agcaoili created a right enforceable against himself, that right can be
enforced against the judgment creditor Yangco, and Ansaldo who stands in
Yangco's shoes. It is true that in Section 50 of the Land Registration Law (Act
No. 496) it is declared that the inscription is the act that gives validity to
the transfer or creates a lien upon the land, but this is no obstacle to the
giving due effect to anterior obligations, as between the parties and their
successors other than bona fide purchasers for value." As a matter of
fact, in Laxamana v. Carlos, which was likewise cited in the Barrido
opinion, this Court, through Justice Villareal, affirmed “that the fact that
the judgment debtor is in possession of the land upon which he holds rights
which are to be sold at public auction, and that the purchaser did not know
that a third party had acquired ownership thereof, does not protect the
purchaser, because he is not considered a third party, and the rule of caveat
emptor is applicable to him." The prevailing doctrine therefore, as
set forth in Isidro v. Dagdag, through Justice Ozaeta, remains. As thus succinctly
summarized: "Under the
jurisprudence established by this Court a bona fide sale and transfer of
real property, although not recorded, is good and valid against a subsequent
attempt to levy execution on the same property by a creditor of the vendor." To repeat then, the right of plaintiff
Geronimo Panizales to the disputed lot in question must be recognized. In thus ruling, the lower court committed no
error.
Nothing is more settled than that a judgment creditor (or more
accurately, the purchaser at an auction sale) only acquires at an execution
sale the identical interest possessed by the judgment debtor in the auctioned property;
in other words, the purchaser takes the property subject to all existing
equities applicable to the property in the hands of the debtor.[9] The fact, too, that the judgment debtor is in
possession of the land to be sold at public auction, and that the purchaser did
not know that a third-party had acquired ownership thereof, does not protect
the purchaser, because he is not considered a third-party, and the rule of caveat emptor applies to him.[10] Thus, if it turns out that the judgment
debtor has no interest in the property, the purchaser at an auction sale also
acquires no interest therein.[11]
These are doctrines that we have long followed in our jurisdiction and
are fully applicable to the present case whose factual antecedents developed at
almost the same time the antecedents of Panizales
did. Significantly, the Rules of Court
is proof of the enduring validity of these doctrines, as its Section 33, Rule
39 provides:
Section 33. Deed and possession to be given at expiration of
redemption period; by whom executed or given. - If no redemption be made
within one (1) year from the date of the registration of the certificate of
sale, the purchaser is entitled to a conveyance and possession of the property;
or, if so redeemed whenever sixty (60) days have elapsed and no other
redemption has been made, and notice thereof given, and the time for redemption
has expired, the last redemptioner is entitled to the conveyance and
possession; but in all cases the judgment obligor shall have the entire period
of one (1) year from the date of the registration of the sale to redeem the
property. The deed shall be executed by the officer making the sale or by his
successor in office, and in the latter case shall have the same validity as
though the officer making the sale had continued in office and executed it.
Upon the expiration of the right of redemption, the purchaser or
redemptioner shall be substituted to and acquire all the rights, title,
interest and claim of the judgment obligor to the property as of the time of
the levy. The possession of the property shall be given to the purchaser or
last redemptioner by the same officer unless a third party is actually holding
the property adversely to the judgment obligor.
In the present case, Leoncia’s earlier sale of the lands to David Sabay via the two deeds was never disputed;
the existence, genuineness and due execution of the two documents of sale are
therefore facts considered established and uncontroverted.
For the first time, the petitioners ask us in their petition to consider
new facts in their attempt to obtain a reversal of the CA decision. They assert in their petition that (1) the
fact that the lands were mentioned in the first document of sale to be the
subject of litigation and (2) that there was a related stipulation on
reimbursement in case a decision adverse to Leoncia was rendered, commonly indicate
David Sabay’s bad faith when he acquired the lands. To the petitioners, David Sabay’s bad faith
should be appreciated in determining who, between them and the respondents,
have superior rights over the property given that David Sabay acquired limited
rights over the lands under the document of sale. This also holds true, according to the
petitioners, with respect to the second deed of sale which provided for
Leoncia’s right of repurchase. The
petitioners further claim in this regard that these documents of sale might
have been fictitiously made to deprive a winning creditor of the remedy of
going after the properties of the judgment debtor. Reverting back to their theory, the petitioners
claim that David Sabay and his heirs’ bad faith deprived them of the protection
the law gives to a holder of a certificate of title; the law, they posit,
should not be used as a shield for fraud.
The newly-alleged facts obviously give rise to issues that were never
raised in the proceedings before the RTC and the CA, and should not therefore
be allowed to be raised at this stage of litigation. The well-settled rule is that issues or grounds not raised below
cannot be resolved on review by the Supreme Court, for to allow the parties to
raise new issues is antithetical to the sporting idea of fair play, justice and
due process.[12]
Despite this conclusion, we nevertheless look at the petitioners’
belatedly-raised issues if only to complete our consideration of the case and definitely
close it.
Good faith is always presumed, and upon him who alleges bad faith rests
the burden of proof.[13] Bad faith is defined in jurisprudence as a
state of mind affirmatively operating with furtive design or with some motive
of self interest or ill will or for ulterior purpose.[14]
We believe and so hold that we cannot, under this evidentiary and
jurisprudential standard, draw an inference of David Sabay’s bad faith from the
cited contract stipulations. The
stipulations appear to us to be conditions in the contract that do not affect
the issue of David Sabay’s good or bad faith.
Quite the contrary, the stipulations simply mean: (1) David Sabay was
prepared to buy a property that he might lose if the stated contingency would happen;
and (2) the parties have agreed to incorporate in their contract the implementation
of one of the warranties usually implied in a contract of sale – the warranty
against eviction.[15] We
note with significance, too, that it is not clear in the records whether David
Sabay eventually lost the lands because Leoncia lost the case alluded to in the
contract – the situation that would have paved the way for the implementation
of the reimbursement stipulation.
Apparently, he did not.
Additionally, that Leoncia was given a right to repurchase the property
does not militate against David Sabay’s acquisition of full ownership rights
over the lands. If at all, this is a
limited right that the petitioners have acquired when they purchased the lands
at public auction. This right is however
irretrievably lost for Leoncia and the petitioners’ failure to exercise it
within the agreed period.[16] Neither is the presence of the right to
purchase indicative of bad faith, as this is a stipulation allowed under the
Civil Code.[17]
Finally, the petitioners’ argument that the two contracts taken together
were fictitious which involves questions of fact is beyond the review that the
present Rule 45 petition covers. Suffice
it to state that the petitioners presented no evidence on these issues before
the lower court, as this is a claim made for the first time, belatedly at that,
in this case.
All these lead to the conclusion that the respondents have indeed
acquired a superior right to the lands. On
the whole therefore, we find no reversible error of law in the decision of the
Court of Appeals.
WHEREFORE, premises
considered, the petition is hereby DENIED
for lack of merit.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
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CONCHITA CARPIO-MORALES Associate Justice |
MARIANO C. Associate Justice |
ROBERTO A. ABAD
Associate Justice
ATTESTATION
I attest
that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s
Division.
LEONARDO A. QUISUMBING
Associate
Justice
Chairperson
CERTIFICATION
Pursuant
to Section 13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, it is hereby certified that the conclusions in the above Decision
were reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
REYNATO
S. PUNO
Chief Justice
[1] Filed under Rule 45 of the Rules of Court; rollo, pp. 10-75.
[2] Decision penned by Associate Justice Remedios A. Salazar-Fernando, with Associate Justice Perlita J. Tria-Tirona and Associate Justice Eliezer R. Delos Santos, concurring.
[3] Rollo, p. 72.
[4]
[5] 52 Phil. 563 (1928).
[6] 70 Phil. 289 (1940).
[7] Rollo, pp. 76-77.
[8] G.R.
No. L-32143,
[9] Lanci v. Yangco, 52 Phil. 563 (1928 ).
[10] Laxamana v. Carlos, 57 Phil. 722 (1932).
[11] Pacheco v. CA, G.R. No. L-48689,
[13] CIVIL CODE, Article 527.
[14] Air
[15] See CIVIL CODE, Articles 1547(1), 1548-1560.
[16] See the cited Laxamana case; supra note 10.
[17] See CIVIL CODE, Article 1601.